Smallholders and domestic timber markets in Ecuador ......the furniture industry in Quito, Cuenca and Ambato . THINKING beyond the canopy . Domestic timber markets . THINKING beyond

THINKING beyond the canopy

Smallholders and domestic timber markets in Ecuador: Research findings and policy options

P. Pacheco, E. Mejia and A. Muzo


Main research questions

What institutional conditions affect the involvement andresultant benefits of smallholders in timber harvesting?

What are the main characteristics of the markets thatinfluence on the land and timber resources use?

What type of relationships establish the different actorsin the timber markets, and what are their implications?

What are the best options to integrate better thesmallholders in the formal timber markets?


Our approach Understand the economic and institutional context Analyze the dynamics of the domestic timber markets Analyze the smallholders’ timber management practices Assess the role of timber in the livelihood portfolios Understand their implications for the forestry governance


Study sites for case studies

Napo Province in Central Amazonia

Orellana Province Orellana in northern Amazonia


The forestry sector in Ecuador


The institutional context

Ecuador has taken important steps to enhance forests governance, with emphasis on simplifying norms

A relatively sophisticated system for verification and control of timber legal supply has been put in place (SAF)

Legality monitoring is complemented with payments for conservation and incentives for plantations expansion

Timber harvesting in Ecuador Most timber for industrial purposes originates in timber

plantations in the coast and sierra regions; only 12% of timber originates from smallholders’ plots in the Amazon Smallholders, however, find difficult to overcome

institutional barriers to operate legally and there are in place vigorous informal timber market networks


Timber extraction by region (2011) Type of forests(thousand m3) Total

Native forests

Forestry plantations

Agroforestry systems

Pioneer formations

Legal conversion

Authorized Costa 129 684 535 30 13 1,391 Sierra 1 920 228 0 942 Amazonia 204 1 20 11 15 458 Total 334 1,604 784 41 28 2,791 Mobilized Costa 121 547 295 30 7 1,000 Sierra 1 768 115 0.15 780 Amazonia 113 0,4 11 11 7 246 Total 235 1,316 420 41 15 2,026

Source: SAF, Ministry of Environment Ecuador (2011).

Amazon: Timber harvested by forest type and provinces (in cubic meters)


Timber extraction in the Amazon

Timber extraction in the Amazon has increased from 357,000 m³ (2007) to 458,000 m³ (2011)

In 2011, only 53.7% was timber that was actually mobilized (246,000 m³) out of the total authorized

Main market destination is the construction sector and the furniture industry in Quito, Cuenca and Ambato


Domestic timber markets


Main timber flows in Ecuador

Source: Produced with information from SAF (2011)


Timber flows from the Amazon

Major timber trade in the Amazon originates in the province of Sucumbios and Orellana

Wood supply originates in forest plantations and agroforestry systems followed by pioneer species and native forests

The Amazon contributes with 12% of total production, but provides 48% of wood from native forests, 81% from small-scale operations

Source: Produced with information from SAF (2011)


Timber markets

Mid- and large-scale depots intermediate most of the timber and are the providers for industry and construction

Small and very small depots intermediate only ~4% of total timber placed in the market

Most of the supplier and buyers are individuals and 12% only are established companies


Timber market networks Forest stakeholders (i.e. foresters, regentes, intermediaries

and final buyers) establish among them complex interactions Local foresters/intermediaries articulate the forest networks

playing a key role in services provision and access to markets


Timber harvesting and control


Transaction costs

The costs for legalizing the timber operations tend to vary. Overall, these costs lead to the fact that forestry operations below a volume of 100 m³/pie are not profitable.

Fuentes: Elaboración de los autores con base en Gatter (2005), Hubenthal (2010), Scholthauzer (2011) FAO (2012), CIFOR (2012)

x


USD 10.7

USD 8.35

USD 7.04

USD 6.07

USD 63

Different scenarios of costs related to formalization

Costs related with the compliance of formal requests are independent of volume. This explains that harvesting of higher volumes lead to reduce the costs per m³ of timber harvesting


Costs of the forestry operations (formal and informal)

The costs of the operations depend on the total volume harvested and the species that are harvested

The costs of the informal timber extraction vary depending on the volumes harvested and labor utilized

Formal/Caso 1 Formal/ Caso 2 Formal/ Caso 3 Informal/Caso 1

Informal/Caso 2

Informal/Caso 3

Informal/Caso 4

Informal/Caso 5

Intermediario Finquero Pago de madera 40 65 Legalización 11 11 5 0 0 0 0 0 Insumos 6 15 12 6 8 18 13 27 Mano de Obra 48 46 109 18 21 26 39 25

0

20

40

60

80

100

120

140

160

USD


Distribution of benefits among actors participating in the forestry operations

Formal/Caso 1 Formal/ Caso 2

Formal/ Caso 3

Informal/Caso 1

Informal/Caso 2

Informal/Caso 3

Informal/Caso 4

Informal/Caso 5

Intermediario Finquero Intermediario 135 103 65 42 73 124 326 Finquero 40 65 -18 16 11 31 18 142 Acarreador 8 14 42 8 11 17 14 10 Moto aserrador 40 32 67 10 10 9 25 15

-50

0

50

100

150

200

250

300

350

USD


Timber extraction and income In Orellana and Napo, forests are

the 2nd source of income of smallholders and indigenous (about 15% respect to the total)

Bargaining power and access to prices information are poor for all farmers, no matter ethnicity

The amount of timber sold with a harvesting program is about two or three times larger that without a program in both provinces.

Timber species differ in the two provinces due to context factors

Small-scale operations There is pressure from brokers and farmers

on the most commercially valuable species (semi-hard and hard) which allows paying for legality or earning more with less

Timber incomes from smallholders depend on the scale of logging and how the forestry operations are organized [based on an analysis of eight cases in two provinces]


Obstacles to legality

Main obstacle is the ability to pay not only for the paper work but the elaboration of ‘forest management programs’

Working informally allows flexibility for species selection and volumes harvesting, while legal programs tend to lead to larger volumes and higher dependency on middlemen

The system of control (SAF) tends to reinforce the asymmetries between the different market players, often favoring to those who have control of the markets

Diverse strategies are put in place to avoid control leading to interactions between the formal and informal sectors; for example, through laundry, smuggling and bribery


Long-term ecological impacts

Smallholders cannot depend on forests incomes indefinitely

Hard species often provide more money but tend to decrease more rapidly since are first chosen for logging

Alternatives are needed in order to ensure that valuable species can provide income in the long run or are combined with fast growth species


Policy recommendations


Areas for policy improvement Continue streamlining/adapting forestry norms Improve economic incentives for forest management More targeted control emphasizing the demand-side Develop actions to enhance markets transparency Bilateral/regional efforts to monitor timber trade


Streamline and adjust current forestry norms

Forest fees linked to frequency and intensity of harvesting

Forest ownership supported by locally recognized tenure rights

Revisit the system of regentes: • More emphasis on management

than in timber legality verification

• Expand the assistance of free technical services for smallholders


Incentives for small-scale forests

management

Economic incentives to manage forests for production vis-à-vis the ones for forests conservation

Make cheap credit available to smallholders as a way to reverse dependency from informal finance

Training and assistance to professionalize local forest service providers (e.g. sawn milling)


Targeted control downstream the

value chains

Less attention to controlling smallholders but a handful of large-scale operators

More emphasis on targeted actions of legal timber control

More attention to control in downstream activities of the timber value chain (depots)


Measures to make timber markets

more transparent

Explore measures to improve the bargaining power of smallholders (for example, minimum prices)

Public procurement schemes to promote legal timber extraction and smallholder’s operations

Support more transparent contracts negotiation making available market information


More attention to transboundary

timber trade

Greater attention to monitoring domestic and transboundary timber flows and transactions

Include transboundary trade of timber as part of bilateral and regional agreements & processes

Coordinated actions between countries involving approches of integrated law enforcement

A more integrated approach


Acknowledgements

Isadora Sauziers. Freiburg University, Alemania

Johanna Morocho, Alvaro Fuentes, Liliana Vásquez, Santiago Alarcón and Patricia Aguirre. Universidad Técnica, Ecuador

F. Del Gato y estudiantes Universidad Estatal Amazónica, Ecuador

Amanda Onofa Universidad Politécnica, Ecuador

Aymé Muzo CIFOR-UEA

With financial support from:

Project partners in Ecuador

People that has contributed to the research:

Documents

Smallholders and domestic timber markets in Ecuador ......the furniture industry in Quito, Cuenca and Ambato . THINKING beyond the canopy . Domestic timber markets . THINKING beyond